Paycheck Protection Program

FEDERAL COVID-19 RELIEF

Many of Madison County’s small business owners are awaiting their first glimpse of financial assistance from the federal government to combat the coronavirus’ economic blow.

The $2.2 trillion economic stimulus package allocated $349 billion to the United States Small Business Association’s Paycheck Protection Program. The program allows small businesses and nonprofits, sole proprietors and independent contractors to access SBA emergency loans through SBA lenders or federally insured banks. SBA rolled out the program April 3 and a continuity issue arose immediately.

“We’re building the plane and we’re already in the air,” Opportunity Bank commercial and agricul- tural lender Paul Kramer said.

The PPP is constantly changing, according to local bankers. Every few days the SBA holds conference calls with banks to update them on information and answer questions. Since the CARES Act passed March 27, the interest rate changed, and eligibility was expanded to sole proprietors and independent contractors.

Banks in Madison County, like many in the country, only accept PPP applications from their current customers. Madison Valley Bank reported that 85 businesses in its southwest Montana service area had applied within 10 days of being able. Opportunity Bank in Sheridan said over 35 small businesses have applied for PPP loans.

Larger banks have quickly reached the lending limit of $10 billion. Wells Fargo stopped accepting PPP loan applications within 24 hours of offering them. Lenders participating in the program have more than doubled to over 4,000 in a week, according to Forbes. But struggling businesses with SBA approval PPP loans have not been dealt the relief.

According to Madison Valley Bank’s CEO, Roy Peterson, the SBA has approved most PPP loan applicants that have come through the bank. Peterson said that the current average loan request from its customers is $74,300. Neither Madison Valley Bank nor Opportunity Bank have issued any loans as of April 14.

Madison County has one of the largest per capita ratios of small business owners in the state, according to a 2019 study conducted by the financial consultant firm SmartAsset. The study ranked Madison County 47th in the nation for its amount of small businesses.

“The SBA folks that we have been dealing with have been great,” Kramer said. “They’re just trying to help us too.”

PPP loans are calculated to cover 2.5 times of an eligible business’ average monthly payroll, up to $10 million. The loans come with a fixed 1% interest rate. If the money is spent according to the program’s purpose of maintaining employment, the loan may be forgiven. The federal government will absorb the debt to lenders. But the borrower must not cut employees or wages and use 75% of the money on paychecks and the remainder on overhead, like rent and utilities, during the two-month period.

The program will run until June 30 or until the money is accounted for. Lawmakers are debating to contribute more funding to the PPP. The U.S. Treasury advised that small business owners act quickly to apply to the program.